Consumer inflation at 5.09% in February vs 5.10% in previous month

Consumer Price Index (CPI) India, retail inflation news: Consumer inflation in the country stood at 5.09 per cent in February 2024, as against 5.10 per cent in the previous month and 6.44 per cent in February 2023, according to official data released on Tuesday. 

The latest reading comes at a time when the Reserve Bank of India (RBI) has pegged consumer inflation, or the rate of increase in consumer prices measured by the Consumer Price Index (CPI), at 5.4 per cent in the current financial year and at 4.5 per cent in the next.

The RBI tracks consumer inflation primarily for formulating its monetary policy. 

Food inflation, which accounts for nearly half of the overall consumer price basket, stood at 8.66 per cent in February as against 8.30 per cent in the previous month.

"Looking ahead, we think that food price inflation will drop back only slowly over the coming months," said Thamashi De Silva, Assistant India Economist at Capital Economics. 

"That means headline inflation will remain within the RBI's 2-6 per cent tolerance band but only gradually drop to the central bank's 4 per cent long-term target by the end of the second quarter... We think the RBI will still take a few more months to pivot towards policy loosening. We expect the central bank to start cutting rates in the third quarter," De Silva said.  

Separate data released on Tuesday showed factory production in the country, gauged by the Index of Industrial Production, grew 3.8 per cent in January as against 4.2 per cent in the previous month. 

Meanwhile, official data released last month showed the country's GDP expanded 8.4 per cent in the third quarter of the current financial year, much higher than the expectations of 6.6 per cent by most economists.

With inputs from Reuters